Sandwich Shop Workers Forced To Sign Non-Compete Agreements

A national sandwich chain makes its employees sign a very restrictive covenant not to compete. It's probably not enforceable.

Jimmy Johns

Jimmy John’s a sandwich chain that I can honestly say I’d never heard of before, but which has some 2,000 locations throughout the United States, including several not too far from where I live, is in the news thanks to a story regarding a contract it requires all employees to sign that purports to restrict their ability to work for competitors for a period of two years:

If you’re considering working at a Jimmy John’s sandwich shop, you may want to read the fine print on your job application.

A Jimmy John’s employment agreement provided to The Huffington Post includes a “non-competition” clause that’s surprising in its breadth. Noncompete agreements are typically reserved for managers or employees who could clearly exploit a business’s inside information by jumping to a competitor. But at Jimmy John’s, the agreement apparently applies to low-wage sandwich makers and delivery drivers, too.

By signing the covenant, the worker agrees not to work at one of the sandwich chain’s competitors for a period of two years following employment at Jimmy John’s. But the company’s definition of a “competitor” goes far beyond the Subways and Potbellys of the world. It encompasses any business that’s near a Jimmy John’s location and that derives a mere 10 percent of its revenue from sandwiches.

(…)

The noncompete agreement is now part of a proposed class-action lawsuit filed this summer against Jimmy John’s and one of its franchisees. As HuffPost reported in August, Jimmy John’s workers recently brought two lawsuits accusing the company of engaging in wage theft by forcing employees to work off the clock.

Last month, the workers filing one of those suits amended their initial federal complaint to argue that the noncompete agreement is overly broad and “oppressive” to employees. (Another Jimmy John’s franchisee included the same noncompete language in a hiring packet posted online, but that packet was apparently pulled from the web after this story was published.)

Kathleen Chavez, the lawyer handling the case, told HuffPost in an email that her two clients named in the complaint were required to sign the agreement as a condition of employment; one is an assistant store manager, the other a former delivery driver and assistant store manager. Chavez argued that, if enforced, the clause would dramatically limit the places a worker could earn a paycheck following a stint at Jimmy John’s.

Chavez said the effective blackout area for a former Jimmy John’s worker would cover 6,000 square miles in 44 states and the District of Columbia. Founded in 1983, the college-town staple now has more than 2,000 locations.

“It is disturbing this document is being used and it is our position that it has broad impact on thousands of employees,” said Chavez, who is a lawyer with the Chicago firm Foote, Mielke, Chavez & O’Neil.

Chavez used the example of a student who works at a Jimmy John’s in Illinois during high school. Once he leaves for college at the University of Alabama, he has been foreclosed from working just about anywhere in Tuscaloosa that serves a decent share of sandwiches — including, in theory, the school cafeteria — because most of those places fall within three miles of a Jimmy John’s.

The relevant agreement is embedded below, and here’s the relevant part of the  non-compete clause that’s at issue:

Employee covenants and agrees that, during his or her employment with the Employer and for a period of two (2) years after either the date of termination of his or her employment for any reason, whether voluntary or involuntary and whether by Employer or Employee, or the date on which Employee begins to comply with this Paragraph, whichever is later,  he or she will not have any direct or indirect interest in or perform services for (whether as owner, partner, investor, director, officer, representative, manager, employee, principal, agent, advisor, or consultant)  any business which derives more than ten percent (10%) of its revenue from selling submarine, hero-type, deli-style, pita and/or wrapped or rolled sandwiches and which is located with three (3) miles of either [the Jimmy John’s location in question] or any (2) such other Jimmy John’s Sandwich Shop

As it turns out, these agreements seem to be becoming more common in areas where they weren’t previously used. In a New York Times article in June, Steven Greenhouse detailed such agreements being used with respect to everything from camp counselors to hair stylists, for example. Writing in reaction to the Jimmy John’s story, Neil Irwin classifies these agreements as another example of employers seeking to place restrictions on employees. However, it’s worth understanding that these agreements really aren’t anything new.

Agreements that place some obligation on an employee to refrain from competing against an employer for a specified period and within a certain geographic area are not uncommon. They are used quite frequently, as a matter of fact for employees at the executive and managerial level, as well as for any employee who might have access to trade secrets or business practices that are of value to the employer. They are also used in the sale of small businesses, for example in the sale of a dry cleaner it will commonly be the case that the seller will not open a similar business within a certain geographic area and certain period, the idea there being that part of what is being purchased is the good will of the business that the seller is selling and that the value of that good will would be diluted if the seller were able to open an identical business on the other side of town the day after it sold the old business. There are good legal reasons for these types of agreements in both situations because they encourage employers to employ people in sensitive positions with the assurance that they have some recourse if the employee walks out the door and takes what he or she learned during their employment to a comeptitor, or that a business seller essentially steals customers after selling an ongoing business concern. Because of the potential losses at stake, the damages that a party who violates one of these agreements could face, which are usually set forth in the agreement in my experience, can be quite substantial.

The question of whether or not a non-compete agreement is enforceable, however, is not a simple matter. While the laws vary from state to state, a party seeking to enforce such an agreement in Court must demonstrate that the agreement, including what it bars the allegedly breaching party from doing, the geographic area the agreement is supposed to cover, and the time period that the agreement is in effect, are reasonable and necessary to protect the interests of the party seeking enforcement. That’s a question that is largely going to depend on the specific facts of the case, of course. For example, a non-compete agreement that covers an executive or someone who was involved in highly technical work for their employer will probably interpreted quite broadly, while one that covers a lower-level employee will not be. Additionally, courts typically scrutinize the geographic and time restrictions that any of these agreements contain and toss out those that are unreasonably broad to the point where they would make it hard for someone to find gainful employment in their field, or open a new business, within a wide area over a long period of time.

Keeping all of that in mind, it strikes me that it would be very difficult indeed for Jimmy John’s, or indeed any employer, to enforce this type of agreement against people whose job basically just involves making sandwiches during the day. In order to do that, they would have to establish that the employees in question were in possession to trade secrets or business practices that would do damage to the company if it were to fall into the hands of competitors. While it might be quite easy to establish how that might be the case with respect to employees at the managerial level and higher, it’s hard to see how it could be establish with these lower-level employees. Moreover, even if you could establish that, the restrictions that the agreement puts in place, in this case, one that draws a three mile circle around all 2,000+ Jimmy John’s locations in the nation that lasts for a period of two years would strike me as being entirely unreasonable for those lower-level workers. Based on how I have seen these agreements handled over the years, I’d be surprised to see such an agreement upheld in such circumstances. Beyond that point, though, one has to wonder if Jimmy John’s, and other employers that use agreements like this, will consider the value of their public reputation against whatever benefit there might be to them in suing a guy who used to make sandwiches for them who just wants to work someplace else now.

Photo via The Huffington Post and Flickr user arvind grover

Here’s the Employment Agreement:

Jimmy John's Employment Agreement by Doug Mataconis

FILED UNDER: Economics and Business, Law and the Courts
Doug Mataconis
About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May 2010 and contributed a staggering 16,483 posts before his retirement in January 2020.

Comments

  1. michael reynolds says:

    Oh, I can’t wait to hear from occasional commenter “Guarneri” (Drew) on this. His firm works with Jimmy Johns and he and I had a long back-and-forth on Jimmy Johns approach to the market as contrasted with In-N-Out.

    I can’t imagine In-N-Out doing this because In-N-Out does not treat their employees like crap or steal their wages. My local In-N-Out is offering a starting wage of $12 an hour and I’ve never seen a sullen or poorly-trained employee at any of their stores. There’s nowhere an In-N-Out employee can go in that market segment where they’ll be treated better or work in a more pleasant environment.

    Whereas the word is getting out about JJ and they’ll be the employer of last resort for people who can’t find anywhere else to work. The people making sandwiches there will be the people who couldn’t even get on at McDonalds. Something to think about when choosing your next fast food meal.

  2. Rafer Janders says:

    You know what would solve this? A union.

  3. Modulo Myself says:

    The question of these being enforceable misses the point. This sandwich place doesn’t care about what workers do after they leave. They care about the ways they can screw employees while they are working. Having this bs legal agreement in place gives a manager a way to threaten retaliation for quitting for not being underpaid, screamed at, harassed, or whatever.

  4. michael reynolds says:

    @Modulo Myself:

    Exactly. This is an attempt to turn employees into indentured servants. It’s thuggish behavior from the Jimmy Johns company. College kids who are the main target demo should be made aware of just what flaming azholes these people are.

  5. Jeff says:

    I’d say it’s an understatement to say that the noncompete is probably unenforceable. Some states, such as California forbid noncompetes outright, but they may use them any way for in terrorem effect (legalese for scaring you with legal-sounding, but in fact illegal language). And unfair business practices isa cottage industry in California.

  6. C. Clavin says:

    @michael reynolds:
    Right…so their business model is to pay people crap…treat them like crap…and make it impossible for them to go and do better at the competition.
    So much for the free-market.
    It makes a ton of sense that Drew likes this approach, though.

  7. beth says:

    @Modulo Myself: It keeps the Subway shop a block away from offering a dollar an hour more and picking off their employees. Wonder what ever happened to that all wonderful free market?

  8. Neil Hudelson says:

    Jimmy John’s a sandwich chain that I can honestly say I’d never heard of befor

    Really? I mean…I can understand if you’ve never tried them, but they are a massive chain and were featured fairly prominently in the Romney campaign at one point.

  9. edmondo says:

    @michael reynolds:

    College kids who are the main target demo should be made aware of just what flaming azholes these people are.

    Jimmy Johns probably realizes that most college graduates will be making sandwiches as a job for the rest of their lives. Viva la Recovery!

  10. grumpy realist says:

    Given what the Jimmy Johns employees in the shop below my apartment do vis-a-vis parking (supposedly on orders of their manager), this doesn’t surprise me.

  11. beth says:

    @C. Clavin: Free market for me but not for thee!

  12. C. Clavin says:

    @edmondo:
    Can you name a similar economy in similar situation that has recovered faster or stronger?

  13. wr says:

    @beth: What happened to the free market? Our government, led by Republicans, abetted by the worst Democrats, decided it worked best when completely unencumbered by regulation or by participation from labor. So now we have the biggest companies in the world conspiring illegally to keep wages low — and a prosecutor who wanted to let them all off with a slap on the wrist, apparently because Freedom.

    And now it turns out it wasn’t just straight tech companies. The major animation studios were also colluding in exactly the same way.

    Why shouldn’t a sandwich shop run its business the same way Apple does?

    And the government and Wall Street nods approvingly, because the only thing that matters is that those who own the stock profit. If it’s necessary to steal from the workers to achieve that, it’s all for the best… because the owners are Makers and the workers are just Moochers.

  14. edmondo says:
  15. Franklin says:

    @C. Clavin:

    Right…so their business model is to pay people crap…treat them like crap…

    I think you forgot “make sandwiches that taste like crap,” especially now that they’ve given up on sprouts due to various E.Coli outbreaks.

    I actually used to go there for awhile, but they would get my order wrong 31% of the time. So adding this new reason (the non-compete), I don’t see why I should ever step foot in that place again.

  16. PD Shaw says:

    I think Doug is probably right that these types of agreements are unlikely to be unenforced against low-level employees, but as far as the other complaints are concerned, Jimmy Johns is a franchiser and arguing that Jimmy Johns sets corporate policies that encourage local franchisee to violate the law is going to be a tough hill to climb. Almost certainly, there are franchisees that are not violating overtime laws.

  17. C. Clavin says:

    @Neil Hudelson:
    I hadn’t heard of them until this kerfuffle hit the news, either.
    They apparently aren’t in CT, VT, or NH.
    Of course my first reaction whenever I see someone proclaiming gourmet products…is that they probably aren’t.

  18. C. Clavin says:

    @Franklin:
    Hehe…I went to their site to find out where they are located and saw that class action suit.
    It’s never a good thing when you have notice of a class-action suit on the front of your website.
    The more I learn about this organization the more it makes sense that Drew (“Guarnari”) is involved.

  19. Neil Hudelson says:

    @C. Clavin:

    They aren’t too bad. They aren’t “gourmet” by any means, but they are much tastier than subway, blimpies, or most of the other fast food delis. Probably Pot Belly’s would be their closest competitor in terms of quality.

  20. C. Clavin says:

    @Neil Hudelson:
    Hmmm….never heard of Pot Belly’s either. I’m feeling disadvantaged.

  21. PD Shaw says:

    Jimmy John’s is based in Champaign, Illinois (U of Illinois), and at least originally were a college-based franchise. Most of the employees I’ve seen appear to be about college-aged, and seem to be having a fun time. (Supposed to be a hiring criteria) They tend to play 70s classic rock music too loud. Employees above entry-level are sent to Champaign for training, the number seemed pretty large to me. Apparently you can make a lot of money driving, if you are fast. There is a local lawsuit against Jimmy John’s arguing that the wage incentives (per delivery) caused/contributed to a car accident.

    When Illinois raised income taxes, Jimmy John’s owner threatened to relocate to Florida, so I’ve read a few backgrounders on JJ’s business. And there were boycott threats at the time that didn’t really amount to anything, as usual.

  22. The question of whether or not a non-compete agreement is enforceable, however, is not a simple matter. While the laws vary from state to state, a party seeking to enforce such an agreement in Court must demonstrate that the agreement, including what it bars the allegedly breaching party from doing, the geographic area the agreement is supposed to cover, and the time period that the agreement is in effect, are reasonable and necessary to protect the interests of the party seeking enforcement.

    As an additional wrinkle, since these employee agreements are, for low level employees, generally presented in a take-it-or-leave-it manner, they also become Contracts of Adhesion, which are generally more restricted in what they may contain than normal contracts.

  23. C. Clavin says:

    @edmondo:
    First…I’m not sure about our claim…as there was a double-dip after the depression which we have not seen. Of course it was caused by deficit hawks slashing spending.
    Second…so you supported massive stimulus spending, including a 3rd World War?
    I mean…that’s how we got out of the Depression…so I can only assume you supported such measures now. .
    Third…In ’08 the reason the ’09 stimulus was weak was not the President. It was the Republican party…which has worked diligently to sabotage both the recovery and the economy.

  24. michael reynolds says:

    @PD Shaw:

    I don’t think it’s about boycotts per se, it’s about a drip-drip-drip that destroys a company’s reputation,and once that rep is gone it’s basically impossible to get it back. When you’re trying to sell a product you want to minimize impediments – a bad reputation is an impediment.

  25. edmondo says:

    @C. Clavin:

    First…I’m not sure about our claim…as there was a double-dip after the depression which we have not seen. Yet. It’s coming. Cliffy. It’s coming. Nothing that caused the last depression has been fixed. It’s been papered over with massive outflows of liquidity from the Federal Reserve Bank. Dodd-Frank is a joke. We will find out how big a joke very shortly.

    Second…so you supported massive stimulus spending, including a 3rd World War? We have that already don’t we? What do you call the Forever War on Terror?

    Third…In ’08 the reason the ’09 stimulus was weak was not the President. I get it Cliffy, NOTHING is ever his fault, NOTHING. Including picking every economic advisor from Wall Street he could find.

  26. JWH says:

    I worked at one company years ago that had me sign one of these things. I was able to research out how enforceable it was and figured that, depending on circumstances, I had around a 40-50 percent chance of beating it in court if it ever came to that.

    Then again, I’ve got an advanced degree. A point worth considering with these things is that executives, managers, and technical folk are savvy enough that they know how enforceable the agreements are, or can hire professional (i.e., a lawyer) to advise them of the agreement’s enforceability.

    Your average low-wage fast-food employee has neither the specialized knowledge to assess a noncompete nor (ordinarily) the resources to hire an attorney. It’s a point worth considering.

  27. C. Clavin says:

    @edmondo:
    Also…the economy’s are not really comparable…today’s economy is far more complex, far more global, has far more government involvement.
    In addition you may have heard that we are no longer on the Gold Standard.
    Try again.

  28. C. Clavin says:

    @edmondo:

    Yet. It’s coming. Cliffy. It’s coming.

    Sure it is….just like massive inflation is just around the corner.
    You right wingers are always making predictions…and they are always wrong.

  29. PD Shaw says:

    Not sure that the plaintiffs here are low-level employees, however:

    one is an assistant store manager, the other a former delivery driver and assistant store manager. Chavez argued that, if enforced, the clause would dramatically limit the places a worker could earn a paycheck following a stint at Jimmy John’s.

    To be an assistant store manager, one must first complete three weeks of training at the JJ headquarters in Champaign. That’s three weeks in a hotel, learning how to handcut meat, and run a business. That type of investment is something courts would be willing to protect in order to encourage improving the employees, by encouraging work after the training is complete. I don’t know if this is the right way to do that, but I don’t think these are the right plaintiffs for an argument better made with respect to starting employees.

  30. C. Clavin says:
  31. PD Shaw says:

    @michael reynolds: Has In-and-Out been destroyed yet by lawsuits accusing them of only hiring young whites?

  32. edmondo says:

    @C. Clavin:

    Have you ever noticed how quickly you devolve into name-calling when you lose an argument?

  33. C. Clavin says:

    @edmondo:
    You were wrong on the facts…how did I lose?

  34. michael reynolds says:

    @PD Shaw:

    No, but that’s probably because it’s not true. My In-N-Out is “integrated” despite being in about the whitest place on earth. But if that notion gained traction, would it hurt them? Of course it would.

  35. Guarneri says:

    @C. Clavin:
    And Reynolds

    You guys crack me up sometimes with your profound ignorance. First, we have nothing to do with Jimmy Johns. Second, the issue was the supportability of the relative wage structures given the realities of product pricing and franchise economics of McDonalds vs In N Out. (Are you lying again, Michael, or is the booze just getting to your memory?)

    As for the essay, Doug pretty much covered it. The most iron clad non-competes derive from selling owners and key equity holders for obvious and the types of considerations noted by Doug. A second tier are for relatively important employees but almost always would need to be accompanied by compensation for the term of the NC. NCs for low level employees would be very problematic and unless the precise way you put the ham next to the turkey and spread the mayo is a vital trade secret I’ve never heard of such ridiculousness.

    You know what else is ridiculous? That the Reynolds and Clavins of the world got their panties all tightened up over a singular and bizarre oddity and attempted to make it a broad cause celeb. How are we supposed to take you seriously when you take this issue seriously?

  36. C. Clavin says:

    @Guarneri:

    That the Reynolds and Clavins of the world got their panties all tightened up over a singular and bizarre oddity and attempted to make it a broad cause celeb.

    Nothing that involves you can be a cause celeb. Aggrandize, much?

  37. Dave Schuler says:

    I think this probably falls under the heading of “personal services contract” and personal services contracts have been unenforceable in the United States for the last sixty years. When managers sign contracts with non-compete clauses they’re usually accompanied by some sort of sweetener that gives the manager an incentive to go along with the gag.

    Trade secrets are another issue. You don’t need a non-compete contract to protect trade secrets. It’s a bit hard for me to imagine what sort of trade secrets Jimmy Johns might have but who knows?

    If I were a Jimmy Johns employee, left, and went to work for a competitor, I’d probably tell them to go ahead and sue and make it my life’s work to keep them going to court for as long as humanly possible. The cost of litigating it would exceed the value.

    There’s also probably grounds for countersuit which would add to the fun.

  38. anjin-san says:

    I’m always struck by how upbeat the staff at In N’ Out Burger is, compared to most fast food joints, where you get the impression that beatings are dispensed before shifts start.

  39. Franklin says:

    @Neil Hudelson: I actually disagree with your assessment of these fast food delis. I’ve been to each of the ones named, many times. For me, Potbelly’s kills the rest in terms of tastiness. The rest are somewhat comparable, although Jimmy John’s is dead last for me due to their obsession with white bread. Granted, I hate white bread. (Yes, you can get wheat at JJ’s although it is a completely different shape and intolerable due to being untoasted.)

  40. Guarneri says:

    @Dave Schuler:

    You may be correct, Dave. After all, McDonalds has “special sauce.” Those JJ employees may be trained to cut ham like sushi chefs cut poisonous fish. In fact, I’m changing my tune on this whole wage thing. If my life is on the line I want their wages raised to $12/hr………..then I’ll be safe.

  41. wr says:

    @Neil Hudelson: When I was working in Columbia, MO I went to JJ’s frequently. It’s a pity the business is so evil, because their sandwiches are pretty good!

  42. wr says:

    @anjin-san: “I’m always struck by how upbeat the staff at In N’ Out Burger is, compared to most fast food joints, ”

    Five Guys is like that, too. I always feel like the workers want to be there, and want to help the customer.

    Amazing what a difference paying and treating employees makes.

    And this may sound like blasphemy to an In-n-Out man, but I haven’t been back to one since Five Guys opened around here. They’re that much better….

  43. Ken says:

    Whenever I see or here anything about “Jimmy Johns” it is immediately translated in my mind into “Jimmy James, Macho Business Donkey Wrestler”

  44. anjin-san says:

    @wr:

    In the bay area, Ike’s is the place to go. My kid likes In N Out, so I hit it a few times a month. The volume of business they do is staggering, and I get the sense that the positive energy in their stores has a lot to do with that. The McDonalds across the way looks like something from a ghost town.

  45. michael reynolds says:

    @Guarneri:

    Nice try. You said quite clearly that your firm had done consulting work with Jimmy Johns. Of course now you think you can avoid that connection by switching to present tense.

    Drew, you’ve never been right about anything, ever. In the annals of undeserved arrogance you are a classic.

  46. JWH says:

    @wr:

    When I was working in Columbia, MO I went to JJ’s frequently. It’s a pity the business is so evil, because their sandwiches are pretty good!

    DARTH VADER: Luke. Turn to the Dark Side, and we can rule the galaxy together.

    LUKE SKYWALKER: No. I will never turn to the Dark Side.

    DARTH VADER: The Dark Side has delicious sandwiches.

    LUKE SKYWALKER: Well ….

    DARTH VADER: Search your taste buds. You know it is true.

    LUKE SKYWALKER: Actually, these are pretty good!

    DARTH VADER: On, I’m also the assistant manager at the Empire Deli. I can’t leave because I know valuable sandwich-cutting trade secrets. and now … you’ve signed the noncompete agreement too!!

    LUKE SKYWALKER: What? NOOOOOOOOOOOO

    DARTH VADER: Also, I’m your father.

    LUKE SKYWALKER: OOOOOOOOOOOOOOOOOOOOOOO!!!!!

  47. michael reynolds says:

    I think to make this perfect Guarneri needs to deny Jimmy John thrice before the rooster crows.

  48. aFloridian says:

    I’ve only been to In-N-Out once in TX, and it was an interesting experience and very busy. It was a good burger – no better than Whataburger, but just as good. I think the big appeal here is the atmosphere, the mystique, a cult following. I would definitely go back.

    I loved JJ’s when I first had it, when I moved where I live now. It doesn’t do it much for me as it did (I like Jersey Mike’s better) but they have always been accurate, fast, a very consistent product.

  49. C. Clavin says:

    @michael reynolds:
    In the interest of playing the Devils advocate…perhaps he was lying then…and simply cannot keep up with his multiple fabrications?

  50. michael reynolds says:

    @C. Clavin:

    He’s embarrassed now because some flack from Jimmy Johns will read this and figure out Drew’s secret identity and wonder why he’s mouthing off about them.

    You can’t rewrite your history in the online universe, which is why I use my real name and confess to my real mis-deeds up-front. For those who care: two counts of burglary, both eventually dropped so I actually have no criminal record, but yeah, I was guilty. And the small-bore skimming fairly typical of waiters.

    Drew’s shot about booze is weird, because I just don’t have the alcoholic gene, through no virtue of my own. Now, had he accused me of being unable to limit my intake of Ben and Jerry’s Half-Baked, I’d have to confess. You can trust me with your booze and drugs, you cannot trust me with your sweets.

  51. wr says:

    @JWH: In my defense, I didn’t know JJ’s was evil at the time.

    I will say that I try not to pay attention to political boycotts of businesses over their owners’ beliefs. I don’t care that Carl Karcher is a rabid anti-abortionist and I’ll eat at the rare Chik-Fil-A out here if I’m on a road trip, even though I’m not wild about their wild religious views. I made a choice a while back not to let politics creep into every choice I make.

    But obscene business practices like this are something else — if there was a Jimmy John’s out here, I would avoid it.

  52. michael reynolds says:

    @wr:

    I do it all the time, but like you it’s less about politics per se and much more about general aszholery. I have dramatically cut what I buy from Amazon because I don’t approve of their treatment of employees or their actions in the marketplace. I won’t buy anything at all from Wal-Mart, period. In-N-Out are right-wing Christians, but I’ll buy their burgers (but not their godawful fries) because they treat their people well.

    @PD Shaw:

    The problem with believing that nasty behavior has no effect on sales is that it would require the converse to be true, that a good reputation has no positive effect. As both wr and I have testified, that’s simply not true. I go out of my way to avoid the jerks and reward the decent. Any establishment I know to be treating employees badly never hears from me again. And the proof of the proposition, if you want more, is in the fact that Wal-Mart runs ads attempting to counter their awful reputation.

    To put it simply, I’d rather not have spit in my food, so I do business with people who keep their employees happy. I’m willing to bet you the spit-per-sandwich quotient is higher at McDonalds or Jimmy Johns than at In-N-Out. I worked too long in restaurants not to know. If you like and respect your employers you want them to succeed, so you wash your hands after using the bathroom. If you hate your employer you kind of figure, “Eh, f— ’em.”

  53. PD Shaw says:

    @Dave Schuler: Covenants not to compete are enforced in Illinois in circumstances like Doug is describing (trade secrets, client lists and in conjunction with the sale of a business). Their duration and scope are subject to reasonable restrictions. The problem for the employee is that the law in this area is judge-made common law so it’s multifactorial and circumstantial. So, JWH’s assessment that he had a 40-50% chance of winning might be common. But most of these covenants (Including JJ’s) contain an attorney – fee provision for the prevailing party.

    The other complication is that forcing a worker to sign a non-compete agreement is not necessarily a violation of any legal obligation on the part of the employer. A bad non-compete is simply unenforceable, just as an unwitnessed will might not be enforceable.

    I think the reality is that most workers, faced with uncertainty and the risk of paying corporate legal fees, will comply with a covenant that may not stand-up in court. This is an area for the legislature to carve out hard and fast rules for those not working full-time or making near minimum wage.

  54. JWH says:

    @wr:

    Did I mention the Dark Side also has cookies? And pie?

  55. michael reynolds says:

    The problem here is quantifying the effect of corporate dickishness. A company going broke never asks itself whether it has simply turned off shoppers by dickishness that inevitably gets translated to the store experience. Shoppers may not put it in quite those terms, but they’ll get a “vibe” off a place. I know my local McDonald’s treats their employees badly because for a while my son was on a McD’s jag. But every time we’d do the drive-thru the order was taken by an obviously untrained (new) employee, the screw-ups multiplied, and now even my son won’t eat there short of desperation. Ditto BK. It takes very little to turn a shopper off, and once turned off, it’s hard as hell to turn them back on.

    There are ethical consumers, but beyond that limited group there are people whose experience as consumers is negatively affected by the poor treatment of employees. I can tell you in five minutes whether staff is happy in a restaurant, and in an environment where it is hard as hell to stay in business, that vibe is a contributing factor to killing a place off.

  56. Dave Schuler says:

    The other complication is that forcing a worker to sign a non-compete agreement is not necessarily a violation of any legal obligation on the part of the employer. A bad non-compete is simply unenforceable, just as an unwitnessed will might not be enforceable.

    Where I think there might be grounds for countersuit is for malicious prosecution, something along those lines. In other words it’s not the contract but trying to enforce it.

  57. george says:

    Just about every hi-tech company in the 90’s and ’00’s had employees sign something like that. Most of us moved between companies fairly frequently. Of that large number, I know a few engineers who were taken to court when they left a company and went to either a competitor or started up their own. In none of the cases did the court find that the agreement held.

    Basically, in hi-tech it was a toothless scare tactic. Not being a lawyer (and knowing nothing of the food industry to boot) I can’t say for sure, but I’d bet its the same in this case.

  58. wr says:

    @JWH: “.Did I mention the Dark Side also has cookies? And pie?”

    I’m doing the low carb thing. The dark side IS cookies and pie.

  59. wr says:

    @michael reynolds: “I have dramatically cut what I buy from Amazon because I don’t approve of their treatment of employees or their actions in the marketplace. I won’t buy anything at all from Wal-Mart, period.”

    I think we’ve sufficiently staked out our corners on Amazon, but I’m with you on Walmart. I wish I could say it’s entirely philosophical, but those stores depress me so much I want to run out screaming as soon as I go into one.

  60. wr says:

    @george: “Basically, in hi-tech it was a toothless scare tactic.”

    Which would explain why the tech companies gave them up and started colluding to fix wages by agreeing not to hire each others’ employees.

  61. Guarneri says:

    @michael reynolds:

    No, Michael. Why lie? We don’t do consulting work. Never have, never will. We buy companies, but not fast food franchises.

    Is this like your lie over at Schulers place about giving Obama a good grade on his presidency for getting out of Iraq and then coming over here to announce that Obama did no such thing? (After Obama disowned the decision). You lie like a dog, Reynolds.

  62. Guarneri says:

    @PD Shaw:

    PD. – I presume Delaware law is cut and dried? Almost every single one of our legal docs specifies Delaware law. (And we refuse to do Massachusetts and Ohio law. Except, of course, the tremendous amount of consulting work we do with Jimmy Johns…..snicker. ).

  63. michael reynolds says:

    @Guarneri:

    I just went back through the online record and you are correct. I see how it happened, but that’s no excuse. I apologize for the error and regret the conclusions I drew from it. My fault entirely.

  64. PD Shaw says:

    @Guarneri: I don’t know about Delaware law, but Doug’s comments and your comments earlier sound like the same common law analysis that Illinois has. There are essentially two issues, does the covenant protect a legitimate business interest, and that is going to depend on the nature of the business. I’ve tried one of these cases several years ago, on behalf of the employee and second (poaching) employer, and I probably spent most of the day putting on evidence that explained how this business sector operated. It is quite easy for an employer to claim that its employees have access to client lists and that it treats its business practices and pricing as trade secrets not to be shared with the competition. Claims have to be differentiated from realities, like how easy is to independently identify potential clients. Are clients likely to move to the second employer, or is the business primarily driven by cost-sensitivity? Employees don’t always understand their own company’s business model.

    Assuming there is a legitimate business interest, the scope and duration of the has to be reasonable. Reasonable is always a matter of degree. At least in this State, judges will reform covenants to a reasonable term, so that three years may be reduced to one year, three miles to three blocks.

  65. Guarneri says:

    @michael reynolds:

    Just to show you how seriously I take this, I gave you a thumbs up for that. ; )

    Carry on…..

  66. Guarneri says:

    “Drew, you’ve never been right about anything, ever. In the annals of undeserved arrogance you are a classic.”

    Yes, but the Maha says if I keep jousting with you Ill achieve total consciousness……..so I got that going for me.

  67. Guarneri says:

    @C. Clavin:

    You look good in a cheerleaders outfit.

  68. Guarneri says:

    @PD Shaw:

    Thanks. I’ve been told by our very expensive NY counsel that we always do Delaware law because it has been so time tested as to make the result almost a given.

  69. michael reynolds says:

    @Guarneri:

    Thanks, I appreciate that. But I want you to know I take it very seriously.

    Normally I’d check first. I’d offer the excuse that I’m jet-lagged, having a bad book launch, just wrapped ten days of personal appearances in the UK (and the whole public appearance deal is so not my thing), my mother-in-law’s in the hospital, one of my kids looks like he’s following dad into drop-out-hood and my wife had to cancel her own book tour because her back is out, and this all hit in the last week, but that’s my f–ed up life and not your problem.

  70. JWH says:

    @wr:

    But cookies and pie are delicious. Search your palate. You know it to be true.

  71. Just 'nutha' ig'rant cracker says:

    @C. Clavin: As much as I dislike defending edmundo, I feel compelled to note that the fact that the “rising tide” of this recovery has not done much to raise everyone’s boat makes your assertion about the recovery just a touch disengenuous.

  72. Just 'nutha' ig'rant cracker says:

    @anjin-san: A friend of mine who worked at a law office had this saying on a screen saver crawl:

    The beatings will continue until morale improves.

    None of the lawyers liked it, but they were not inclined to criticize for fear of what it would do to already marginal office morale.

  73. C. Clavin says:

    @Just ‘nutha’ ig’rant cracker:
    Because the rising tide theory is complete bunk.
    The richest 1 percent in the world owns 48 percent of all the world’s wealth, according to Credit Suisse, and the ratio of wealth to household income in the U.S. is the highest it has been since just before the Great Depression.
    But that is a function of the Republicans 30 year war on the middle-class…not the recovery itself.

  74. Guarneri says:

    @michael reynolds:

    No, but I understand. Sing along with me “always look on the bright side of life…..”

  75. Tony W says:

    @michael reynolds: Typical liberal, apologizing when you are wrong.